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Tuesday, September 18, 2012

Heinz Measures Shopper Behavior To Spur Traffic Flow and Sales

How can traffic flow be increased in certain aisles? What category adjacencies will produce the most sales? How can end caps be used more effectively?

Those are among the persistent questions that grocery retailers are asking H.J. Heinz & Co. To come up with answers, the maker of the iconic brand of ketchup recently did a deep dive into shopper behavior. By deploying sophisticated video analysis, Heinz has uncovered key insights that it will share with retailers. The focus will be on the condiment category and the frozen food aisle. Among the marketer’s frozen food brands are Ore-Ida potatoes, T.G.I. Friday’s snacks and appetizers, and Weight Watchers Smart Ones meals.

“We’re going to take some of these insights and redesign some end caps to see if we can drive higher cross purchase and higher conversion. We’re also going to do some in-store testing of our condiment aisle,” said Chris Shaw, Group Leader, Category Business Planning for the Pittsburgh-based company.

Shaw outlined his testing and results at the Shopper Insights in Action conference recently in Chicago. His co-presenter was Priya Baboo, President of Shopper Insights for VideoMining Corp., whose technology powered the research. The company’s actionable insights help retailers and consumer product manufacturers optimize their marketing and merchandising strategies. These insights are based on in-store measurement technology that automatically converts video into precise statistical data on the shopping process.

To uncover the opportunities in store, Shaw said Heinz conducted “Frozen Aisle Benchmarking.” It analyzed the top ten most-shopped categories to compare traffic flow and sales conversion.

“If you think about traffic for premium ice cream or breakfast,” said Shaw, “it brings up the question: If we could drive more traffic, would that actually drive conversion within the store? We were actually able to measure this. We were able to look at which categories actually were more responsive to more traffic. What we found out was when breakfast, premium ice cream, and frozen potatoes were exposed to more traffic, it drove higher conversion in the store.”

Armed that those insights, Shaw said Heinz then considered adjacencies. For example, if you position a category like breakfast next to single-serve meals which draws high traffic, do you change what leaves the aisle?

“Having this information actually gives us some real data on where we can prioritize,” said Shaw.

Retailers most often ask about store traffic because they are losing shoppers in the frozen food aisle. Shaw says grocers have a better chance to increase sales from shoppers already going down the aisle versus trying to get people who aren’t shopping the category to go there. More importantly, the research found that two of three shoppers in the frozen food aisle only buy one category – even though there is a wide range of products for breakfast, lunch, dinner and desserts.

So the challenge, said Shaw, is to determine what to do in the aisle or on end caps to drive conversion by better understanding the dynamics of cross purchase.

He pointed out that single-serve meals for lunch and dinner are typically stocked in one frozen food aisle, while single-serve breakfasts are in another aisle. “People come into the store trying to fill a bucket of meal occasions. But retailers are trying to make it difficult for them to shop by sticking these meals in different aisles.”

The research showed that single-serve meals and breakfasts are key categories for end caps. That’s because they generate the most traffic exposure and also have the highest cross purchase. Two is the optimal number of categories to drive conversion within the store.